Eddie writes: Do you think the mortgage demand dropping to a 22 year low is significant to the market that is still considered a high demand housing market?
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Welcome back to Real Investing. I am Tim Herriage. Thank you so much for swinging back by today. Got a good question today from Eddie. Eddie says, “Do you think the mortgage demand dropping to a 22-year low is significant to the market that is still considered a high demand housing market?” Well, first off, Eddie, thank you for actually looking at both sides of the equation, the supply and demand. And thank you for talking about history and stats because I don’t know, it’s one of those things. I don’t think a lot of people do. So let’s look at net new listings on a weekly basis. So net new listings this week ending August 14th nationally is a 13% decline year-over-year. Said another way, this time last year, there were 94,000 new listings on the market that week this year. There were 108,000 last year.
So net new listings, if you look at it, there were less new listings this week than the comparable time in 2019, 2020, or ’21. And it’s pointing down, folks. In June and May, there was a lot of activity because people were worried that they had missed the boom. And I think in June and July, you saw a lot of panic selling from people that thought they had missed the boom. And I think you’re looking at people that are saying, “Okay. You know what? We may have missed the boom, but let’s just stay put where we’re at because we’ve got a 4%, 3% interest rate.” You look at pending sales, the pending sales numbers, we’re still up over to 2019 levels. We’re below 2020 levels. And we’re definitely below 2021 because last year was a crazy year. But there’s 16% less pending sales right now than there was last year.
But when you look at the new listing median home price, houses are being listed at 10.5% more than they were this time last year. So the new listing median home price last year was about 350. This year, it’s about 385. So that’s the new listing. But when we look at the sales price, the median sales price, and so now the median sales price as of this week is 374,000, which is still 7% higher than last year. But again, last year was a crazy market. So we’re at 374 median sales price nationally now against 350 this time last year, but folks, Eddie, it was 302 the year before that and it was 274 the year before that. So if you take 2019 to 2022, you’re up basically $100,000 in median sales price across the nation. Today’s to close, you would think hearing everything that you’re hearing, that this week would be a bad week and it would take longer to close. It was actually not true. So we’re at 26 days to close right now versus 27.7 this time last year. That tells me everything sounds pretty decent.
New listing price per square foot, price per square foot’s a big indicator to me because of I’ve been saying for a couple of years that replacement cost is a low comp. Price per square foot is 208 right now on new listings versus 105 per foot this time last year. And we’ll just go all the way over price drops. Price drops are huge. 7% year-over-year, 3.9% increase. I just think that’s because people don’t know how to do math and they’re putting their houses on the market for way too much. Age of inventory, age of inventory is above last year, but below 2020. Months supply, now this is your absorption rate. This is the key factor. There are 11.2 weeks supply in the market right now, which is more than last year. It is more than 2020, but it is less than 2019. And I think we can all agree that 2020 and 2021 were just not normal years. So I feel like we’re getting back to normal.
So I actually hope the month supply goes up another couple of weeks. I’d like to get back to the 14 or 15 that we should be at this time of year, 16 going into the winter. That’s normal. That’s what we need to be. We need to be normal. We need to stop being crazy. Median pending square foot, average sell to list ratio. Okay. So houses are still selling above list price nationally. Houses are still selling above list price nationally. I mean, come on, guys. Median sale price per square foot is 201 versus 184 last year. So I see that the market has weathered a lot of crazy overreaction pretty well. I trust the public to continue to overreact. And the last thing is I look at mortgage rates where they closed on the Fannie Mae, Freddie Mac weekly study. 30-year fixed rate was 5.3. 5.3 is historically a great rate. It’s 250 basis points, or 2.5% for those of you that don’t speak basis points, below the 50-year average. It was 5.81%, June 23rd. So we’re almost three quarters of a percent.
It was 67%, 68%, 68 basis points below the peak of June 23rd. And I believe that was the peak. I think we’re going to chop in this four and a half to five and a half range until we get some more clarity from the Fed. But the mortgage demand has to drop because there’s less houses being built and there’s less houses being put on the market. So when there’s less available, inventory mortgage demand has to drop. And I don’t think that that stat is specifically significant. I watch the absorption rate, the months or weeks supply on the market. Eddie, great question. Thank you very much. If you’re listening and you have questions, hop on over to ihavelunchmoney.com. I’ll see you guys tomorrow.
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